What does port-and-increase mean when the new home costs more?

Why this becomes a closing problem

The client focuses on keeping the old low rate and assumes the entire new mortgage will receive that rate. The commitment arrives with a blended rate, a new term or two mortgage segments, and the payment is higher than expected.

A practical example

Suppose $350,000 remains on your mortgage and the new purchase requires $520,000. The first $350,000 may be eligible to port, while the extra $170,000 is priced under current policy. Depending on the lender, the pieces may be blended or registered separately. The payment and penalty formula may also change.

How the lending routes may differ

• A lender: may offer a port-and-increase when the full file qualifies and the new property is acceptable.
• Alternative/B lender: can examine broader income evidence when the increase fails standard income policy, but usually replaces rather than ports the old A mortgage.
• MIC or private lender: can sometimes provide a second mortgage or short-term top-up when the first lender remains in place, subject to consent, equity and exit planning.

Policy boundary: Porting, bridge periods, qualification, fees and property acceptance are lender and contract decisions. A regulator’s consumer information does not require every lender to approve the same structure.

Questions to ask before committing

• Which balance keeps the old rate?
• What rate and term apply to the new money?
• Will there be one charge or multiple mortgage components?
• How will a future penalty be calculated?

Rajiv’s practical view

Ask for the payment, total borrowing cost and future break-cost explanation in writing. Keeping a low rate on one segment does not automatically make the combined structure the least expensive choice.

Before making a firm offer or changing closing dates, confirm the full structure in writing. A pre-approval or verbal discussion is not the same as final approval of the borrower, property, sale, bridge amount and lawyer instructions.